Study of Higher Ed’s Use of Private Firms to Develop Online Education Questioned

A new report suggests private firms that public colleges and universities use to digitize learning may not have students’ best interests in mind, but education reformers contacted by School Reform News disagree strongly.

“Driven by the desire and need to make money for investors or owners, . . . these companies may prioritize profit over the interests of online students, to whom they owe no loyalty, financial or otherwise,” author Margaret Mattes writes in “The Private Side of Public Higher Education,” published by the progressive Century Foundation in August.

OPMs ‘Helping Universities’

Jesse Saffron, former managing editor of the Martin Center for Academic Renewal, says the Century report speculates about potential harm even though nobody has been shown to have done anything wrong.

“The report itself reveals that, so far, OPMs have not caused mischief,” Saffron said. “In fact, it shows that in many cases, these firms are helping universities cut costs and achieve economies of scale. And there’s no evidence that student learning has slipped. The Century Foundation’s concerns are based only on speculation.

“Nevertheless, I agree that caution is warranted when OPMs go beyond providing learning platforms and start producing course content and degree programs,” Saffron said. “When a public university delegates aspects of its core mission to an OPM, it should provide extra oversight and fully inform students.”

Digital Transition Difficulties

Public universities have found expansion to digital education isn’t always easy. The courses require special digital platforms and techniques; they must recruit nontraditional students; and many faculty don’t want to teach the courses. As a result, many have hired firms such as Academic Programs, 2U, EdX, Coursera, the College Network, and Pearson to create and administer these programs.

These firms convert traditional courses to online formats, recruit and follow up with students, and sometimes supply ready-made courses. They are known as “OPMs,” or online program managers. The firms usually pay the upfront costs and often receive 50 percent or more of the revenue they bring in.

The Century Foundation reviewed 117 contracts between nonprofit schools (mostly public universities and community colleges) and private OPMs. Mattes concluded the companies provide “services so intertwined with the actual teaching and learning” that they could undermine the schools’ independence.

“Specifically, the growing use of for-profit intermediaries to provide online programming at public institutions raises important questions concerning whether these agreements appropriately shield students from the profit-seeking motives of these companies, inform students about exactly who is responsible for the education they are receiving, and provide quality education that is up to the standards of institutions backed by the full faith and credit of states,” Mattes states in the report.

Conflicting Research

Alana Dunagan, a higher education researcher at the Clayton Christensen Institute, says working with private firms can be a good way for universities to enter the online market.

Dunagan is author of a report on online education issued earlier this year that comes to a completely different conclusion from Century’s. Whether universities use private firms, start their own autonomous units, or buy them, as Purdue University has purchased Kaplan University, the ultimate promise of online education is “to achieve lower costs through innovation and reach marginal students who are not sure that they can make it in college,” Dunagan said.

No ‘Major Scandal’

Mattes suggests the companies may cut quality, raise prices, and bring in unqualified students to increase enrollment numbers. Mattes does not identify any specific problem she has encountered, citing only “risks posed by the OPM model.”

“OPMs are a relatively new phenomenon that, so far, have not erupted into a major scandal,” Mattes writes. “However, as the marketplace stabilizes and online education becomes more competitive, these proprietary companies will likely look for new methods to increase revenue. If institutions—public and nonprofit alike—are not careful to monitor these contractors, students and taxpayers who thought they were working with a relatively safe public institution may find that they have been taken advantage of by a for-profit company.”

‘Misplaced’ Hostility

In raising her concerns, Mattes acknowledges she hasn’t uncovered any actual problems.

“These outside contractors may be supporting and supplying online programming effectively, but the involvement of a third-party—particularly a profit-seeking entity—in providing services so intertwined with the actual teaching and learning also presents potential risks to quality and value in the education,” Mattes writes in the report.

Victor Brown, a former faculty member and administrator at Ursinus College, says colleges can and should work in harmony with OPMs.

“Hostility to OPMs, just because they are OPMs, is misplaced,” Brown said. “Higher education institutions need to work with technology providers to offer digital courses reliably, and at costs that are as low as possible. Instead of distrusting the OPMs, colleges need to partner with the ones that will do the best job, much as students evaluate the colleges that they choose to attend.”